Financial Reporting

Question 1

what type of account is treasury stock?

Answer 1

it is a contra equity account - it reduces stockholder’s equity and usually retained earnings.

Question 2

what is the cost method for treasury stock?

Answer 2

views the purchase and sale of treasury stock as one extended transaction

Question 3

what journal entries follow a stock dividend?

Answer 3

the par value of the stock dividend reduces RE (debit). no APIC, because no cash is received in exchange for issue of stock.

Question 4

how are purchase commitments addressed?

Answer 4

not reported on balance sheet, but disclosed in the notes

Question 5

goods or services (from non employees) in exchange for equity is recorded at what value?

Answer 5

fair value

Question 6

formula for debt-to-equity ratio?

Answer 6

total liabilities / total stockholder’s equity

Question 7

how are extraordinary items recorded on an income statement?

Answer 7

separately on the income statement, below discontinued operations section.

Question 8

what disclosures are required on the statement of cash flows (indirect)?

Answer 8

noncash investing, financing activities, obtaining an asset via capital lease, issuance of stock / debt, interest, taxes paid

Question 9

when is the 10Q due?

Answer 9

40 days after quarter end

Question 10

journal entry for stock option issue?

Answer 10

DR deferred compensation expense

CR stock warrants outstanding

Question 11

journal entry for stock option exercise?

Answer 11

DR cash
DR stock warrants outstanding
CR common stock - par value
CR apic

Question 12

formula for current ratio?

Answer 12

current assets / current liab

Question 13

what are other comprehensive income items?

Answer 13

Available-for-sale securities fair value changes that were previously written down as impaired
Available-for-sale securities unrealized gains and losses
Cash flow hedge derivative instrument gains and losses

Debt security unrealized gains and losses arising from a transfer from the available-for-sale category to the held-to-maturity category
Foreign currency gains and losses on intra-entity currency transactions where settlement is not planned or anticipated in the foreseeable future
Foreign currency transaction gains and losses that are hedges of an investment in a foreign entity
Foreign currency translation adjustments
Pension or post-retirement benefit plan gains or losses
Pension or post-retirement benefit plan prior service costs or credits
Pension or post-retirement benefit plan transition assets or obligations that are not recognized as a component of the net periodic benefit or cost

Question 14

what is “comprehensive income”

Answer 14

the change in equity (assets - liabilities) of a business enterprise during a period from transactions and other events and circumstances from nonowner sources

Question 15

when is the 10k due after quarter end?

Answer 15

75 days (early) or 90 days

Question 16

What is working capital

Answer 16

Current assets minus current by liabilities

Question 17

what is reported in a summary of significant accounting policies?

Answer 17

“basis of consolidation, depreciation methods, amortization of intangibles, inventory pricing”

Question 18

what financial statements must employee benefit plans and trusts file?

Answer 18

1 - A statement of net assets available for benefits of the plan as of the end of the plan year
2- A statement of changes in net assets available for benefits of the plan for the year then ended

Question 19

a publicy traded company must make what disclosure regarding major clients?

Answer 19

if a client is 10%+ of total revenue, must disclose amount and segement. identity of client not mandated.

Question 20

where does other comprehensive income go?

Answer 20

in statement of financial position. it is in accumulated other comprehensive income, an equity account.

Question 21

day’s sale in inventory formula?

Answer 21

(avg inventory / cogs) x working days for the year

Question 22

formula for accounts receivable turnover?

Answer 22

a/r turnover = annual credit sales / average a-r

Question 23

what is a contra asset and give some examples?

Answer 23

contra asset is an asset with a normal CR balance. accumulated depreciation, accumulated amortization, allowance for doubtful accounts

Question 24

inventory turnover ratio = ?

Answer 24

= CoGS / avg inventory

Question 25

defensive interval ratio = ?

Answer 25

= quick assets / avg daily spend

Question 26

what is an operating cycle?

Answer 26

time from the sale to the collection of money due.

Question 27

dollar value LIFO, how to get price index?

Answer 27

end inventory @ base / end inventory @ recent = price index… x next year difference to get next year layer